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Tiered commission calculator
Enter the month’s sales and your tiers, and see what it pays both ways a tiered plan can be paid. It opens on an example — a stylist on 40%, 45% and 50% bands with a $7,000 month — type over it.
Sales this period
Tiers
Marginal
$3,000.00
Each rate only on its own band · effective 42.9%
Retroactive
$3,500.00
50.0% on all sales once that band is reached
Marginal breakdown
| Band | Rate | Sales in band | Pays |
|---|---|---|---|
| $0–$4,000 | 40.0% | $4,000.00 | $1,600.00 |
| $4,000–$6,000 | 45.0% | $2,000.00 | $900.00 |
| $6,000+ | 50.0% | $1,000.00 | $500.00 |
Marginal or retroactive?
A tiered plan raises the rate as sales grow. What most plans don’t say clearly is which sales get the higher rate:
- Marginal — each rate applies only to the sales inside its own band. It works like tax brackets: moving into a higher band never changes what the earlier sales paid.
- Retroactive — once a band is reached, its rate applies to everything sold in the period. The sale that crosses the line re-rates the whole month.
On the example month, the difference is $500. Neither method is wrong, but a plan that doesn’t say which it uses will be read the expensive way by the person being paid. Write it down.
Common questions
What is tiered commission?
A commission plan where the rate rises as sales grow — for example 5% up to $10,000 and 8% above it. The bands are called tiers or levels.
What is the difference between marginal and retroactive tiers?
Marginal tiers pay each rate only on the sales inside its band, like tax brackets. Retroactive tiers apply the rate of the highest band reached to all sales. On $14,000 with 5% to $10,000 and 8% above, marginal pays $820 and retroactive pays $1,120.
Which method is more common?
Both are common. Retroactive tiers pull harder near the line because crossing it re-rates the whole period; marginal tiers are smoother and cost less. What matters is that the plan says which one it uses.
Why does the calculator show a jump at the next tier?
Under the retroactive method, the sale that crosses into the next band raises the rate on everything already sold, so that one sale can be worth hundreds of dollars. The calculator shows how far away the next band is and how big that step is.
Related
- Salon commission calculator — plans with a minimum to earn and a rate that climbs to goal.
- How to calculate commission — tiers, thresholds and draws with the arithmetic shown.
- Hair salon commission structure — tiered service commission in practice.
CommissionBoard runs plans like these from your POS report and shows each person how close the next tier is while there’s still time to reach it.
Free to use, nothing to sign up for, and nothing you type into the calculator is sent anywhere — it all runs in your browser.